Yes, there will be a market crash (for both technology stocks and property)
Posted by markharrison on August 3, 2007
Yesterday, I was involved in two separate conversations, both of which ended up being about market crashes.
- Firstly, I’d been asked to record a CD about property investment mistakes for Nightingale Conant, and one of them was buying in the wrong way for where we are in the market cycle.
- Then, I was drawn into the debate on Marshall Kirkpatrick’s site, sparked by John Dvorak’s comments about whether the Web 2.0 world was due a crash.
I believe that there will be another crash in both markets. I have to believe this, because I can only believe one of two things:
- This Government (and the other world governments, given we live in an interconnected world) have put such a firm framework for continuous growth in place that, irrespective of what happens in the future, and who gets elected, we have seen the end to boom and bust
- Boom and bust is still with us – the last few years have been relatively boomy (in both UK property and technology stocks)… so bust will come at some point in the next few years, sure as day follows night (but with less predictable timing.)
There are some common things that get wheeled out in every bubble, since, well, Tulipmania in 1636-7:
- It’s different this time… this one tends to get used by people with strong vested interests, either because their jobs depend on it (rational denial), or because they have invested heavily in a sector and hope it’s true (irrational denial). Experience of the last few hundred years has shown that “it’s different this time” tends to get used more and more frequently, the closer we get to the crash.
- People will still need/use XXX (a place to live, social networking sites)… OK, but if this were “sufficient” reason, then the property crash of 1989-94 would not have happened, nor would the .com collapse of 2000. There will be winners and losers – some will go on to be worth far more, some will “tread water”, others will go down in value.
- XXX has a vested interest in saying there will be a crash. OK, so we do 🙂 … but that doesn’t mean that I’m going to be wrong. (See also point 1)
What I can’t do is tell you two things: I can’t say WHEN the crashes will come, nor can I say how deep they’ll be.
But, boom and bust is here to stay…
This entry was posted on August 3, 2007 at 9:27 am and is filed under Property Investment, Social Networking, Web Marketing, Wikinomics. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.